Debut trading in Hygo Energy Transition was suspended on Thursday after chief executive Eduardo Antonello was pulled into the sprawling corruption investigation into Petrobras.
Hygo, a joint venture between Golar LNG Limited and US private equity firm Stonepeak Infrastructure Partners whose shares had been due to be floated in New York, did not confirm or deny an IPO cancellation, according to Reuters.
Brazil's federal police executed 25 search warrants on Wednesday, as authorities look into $40m in bribes a Seadrill joint venture may have paid to secure a $2.7bn contract with the state-controlled oil company in 2011, Michael Webber of Webber Research & Advisory said in a note.
At the time, Antonello was working with Norwegian billionaire shipping magnate John Fredriksen's Seadrill, where he was tasked with drumming up business with the South American country's state-controlled oil company.
Tor Olav Troim-controlled Golar LNG, whose Golar Power joint venture with Stonepeak Investment Partners has recently been renamed Hygo, said it was aware of the allegations.
"The allegations against Mr. Antonello involve conduct that predates and do not, in any way, implicate his work at Hygo," Golar said in a statement.
"However, in an abundance of caution, Hygo has initiated a review to seek to confirm that there have not been any deviations from its culture of compliance in connection with Mr. Antonello's service to Hygo."
Golar was part of Fredriksen's interests before he split with his former business partner Troim.
Antonello has reportedly had his assets and accounts frozen.
He was set to make $6m, plus 958,000 common shares in the deal.
Could the deal be off?
Webber said in his note that the news could put Hygo's $558m initial public offering in jeopardy.
The company said earlier this month that it intends to sell 23.1m common shares on New York's Nasdaq for between $18 and $21 per share.
He said there was no direct connection between Antonello's alleged conduct and Hygo, but that the market and underwriters — including Morgan Stanley and Goldman Sachs — may not wait for further details.
"Obviously, warrants and frozen accounts related to a high-profile anti-corruption campaign during the middle of an IPO roadshow, is a tough look... and we'd be surprised if the deal survives it, although the situation is certainly fluid," Webber wrote.
Shipping has gone several years without an IPO in New York, and a failed Hygo deal would extend that drought.
On the news, Webber lowered Golar LNG's target to $14, but left intact its outperform rating.
Around lunchtime on Thursday, Golar LNG shares were trading down $2.68, or 26.5%, to $7.46. By the end of the trading day they had fallen 32% to $6.86
Morgan Stanley declined comment.
Goldman Sachs did not immediately return calls and emails.
Operation Car Wash
The 44-year-old Antonello began working at Seadrill in 2008 after eight years at oilfield services outfit Schlumberger, according to his LinkedIn profile.
In 2015, he joined Golar Power.
He is also reportedly a partner at Troim-owned Magni Partners.
The probe implicating him in corruption is better known as Operation Car Wash, which began looking into corruption at Petrobras in 2014.
The investigation has pulled in several shipping companies, with AP Moller-Maersk disclosing last month that it was cooperating with Brazilian authorities after two former executives, Viggo Andersen and Wanderly Gandra, were charged for paying bribes over an eight-year period beginning in 2006.
Troubled Taiwanese shipowner Nobu Su, was also caught up in the allegations. He allegedly paid $31m to Petrobras officials to secure a $1.82bn contract for Vantage Drilling, which later became the subject of a series of disputes in US courts.
Su has denied paying any bribes.
